Developing Your Fee Schedule
By Caryl A. Serbin, RN, BSN, LHRM
I'm fortunate to have consultants in my companies from multiple areas of expertise including ASC nursing, development, management, business office, coding, billing, accounts receivable management, inventory control and finance. As a full-service development company, we also have legal and architectural resources.
To give you some history, I started in this business as a hospital-based OPS nurse and later an ASC administrator. As an administrator-turned-consultant, I know the challenges you face each day in this fast-paced, ever-changing ASC arena. I will address key issues each month and it is my hope this column will provide you a format to keep up with some of those changes, as well as provide information for start-up ASCs, and address coding and billing questions. Over the years, I have also accumulated extensive resources within the industry that can provide information on issues affecting your ASC.
Our topic this month is your center's fee schedule. As a start-up ASC, a very important, but often forgotten-to-the-last-moment task is development of your fee schedule. As an existing center, the fee schedule, once developed, is often forgotten.
Step one in developing a fee schedule is to determine the time frame and choose team members. Be sure to allow sufficient time to receive supply costs from your supplier, time for managed-care companies to respond with anticipated reimbursement, and time for the proposed fee schedule to be reviewed by your accountant, attorney and governing body. We have found that a team approach in developing a fee schedule works well. Important members to consider for your team are the administrator, business office coordinator, clinical staff, physicians, billing/coding personnel, governing body, attorney and accountant.
Step two is to determine your resources. The following are helpful and informative organizations that can make this task a little easier:
a) Sample fee schedules
1) CMS website
2) Managed-care companies
3) Consultants
b) Procedure costs
1) FASA Procedural Cost Manual for ASCs
2) MGMA ASC benchmarking project
3) Large supply companies
4) State Web sites
c) Templates
1) ASC software companies
2) Consulting accountant
Step three is to calculate your total procedural cost. Perform a cost analysis of the top 20 procedures planned for your center. Include your direct costs, e.g., all activities, materials and equipment that are traceable to the specific procedure (labor, supplies, medications, use of equipment, implants/prosthetics) and indirect costs, e.g., all activities, materials, and equipment that cannot be directly traced to a specific procedure (rent, utilities, maintenance, employee education). Helpful hint: Try to obtain preference cards from the hospital where your physicians do surgery. This will save you a lot of time and energy.
Step four is to assess your competition and managed-care market. Do you have other ASCs or hospital outpatient departments in your area? The resources listed in step two often can provide information regarding fee structures for your demographic area. Contact your managed care companies to determine anticipated reimbursement on common procedures, discounts for secondary, tertiary procedure codes, reimbursement on prosthetics/implants/HCPCS-allowable codes and carve-out possibilities.
Step five is to evaluate different types of fee schedules. Most ASCs have a global fee structure, i.e., a flat fee for all services. However, if you prefer, either of the two most common types of fee schedules listed below may be modified to include line-item billing.
a) Medicare-based fee schedule -- based on a percentage of Medicare reimbursement rates
b) Procedural-cost fee schedule -- based on a percentage above cost of procedure
Step six is to develop the fee schedule. Once you have chosen the type of fee schedule best suited to your ASC, assign a fee to each procedure code (CPT), either individually if you are basing your fees on cost, or by Medicare reimbursement groups. Remember, Medicare has applied these groups in a rather whimsical manner so you may need to carve out some high-ticket procedures and assign them special rates. Indicate what is included in your fee, i.e., labs, EKGs, etc. Define discounts for additional procedure codes, i.e., 50 percent, 50 percent, 25 percent. Determine fees for prosthetics/implants/HCPCS-allowable codes. Record all of this in a fee schedule policy.
Step seven is to have policies and procedures in place that will assist you in complying with your fee schedule. You will need a compliance plan in which you will outline your fee schedule and how you will handle staff education, internal auditing, billing and coding issues, OIG compliance and enforcement of standards.
Finally, all centers should perform periodic audits of managed care payments to determine if reimbursements are paid according to contracts, if carve-outs are being paid correctly and if prosthetics, implants and HCPCS-allowable codes are being paid at agreed-upon rates. You should evaluate your fee schedule at least annually and make adjustments if your supply or labor costs have increased, or perhaps do a cost-of-living increase if your market allows. Other reasons for reevaluation of your fee schedule or specific procedure codes include inclusion of new technology and/or equipment. Be sure to perform a cost analysis before new procedures/ equipment are utilized and negotiate with managed care for coverage.
Other topics I plan to cover in the next few months include regulatory and legal issues, ASC development questions, HIPAA and compliance, risk management, managed care, business office responsibilities, supply costs, clinical issues, billing and coding, inventory management, new technology, and performance improvement. We will try to dispel rumors, answer your questions and provide how-to tips on everyday issues. Hopefully, we will all have fun learning from one another. I would like to encourage you to e-mail questions or suggestions for topics to cs@surgecon.com.
Caryl A. Serbin, RN, BSN, LHRM, is president of Surgery Consultants of America, Inc. and Surgery Center Billing, LLC.